From what I can tell, there are a ton of different methods to fix this. They all involve changing the launch options, which can be accessed in your steam account through GAMES, the right click on HALF LIFE 2 EPISODE 2, the PROPERTIES, and finally, SET LAUNCH OPTIONS. You will then get a small box from there, this is where things change. what worked for me was this:


I have 512MB of RAM, 128MB of video RAM with a 2.80 GHZ processor. This could have something to do with it. I typed in the box the following:

-dxlevel 90 -applaunch 220 -heapsize 256000 -loadlimit 25600

I copied and pasted that right from my box, so just copy it to yours.

This worked with my settings.
If it doesnt work with yours, search some forums a little bit and try to find different settings. After i put this in, my game worked perfectly.
I hope i helped some of you with this problem.